Very well :)
But before I get started I have a few questions:

A: Slidding Panes? Not sure what you mean on this one as I have O2007 open right now and the panes in the left navigation "dont" slide but
rather show/hide panels.

B: New Message Alert? You mean a pop up window (dialog)? as the Pop up Message that appears in the bottom right "new message notification" on a web page (like in weboutlook) is a security hack not a dhtml/javascript feature.

C: I have to do it with the current version of IG as I am not going to place old controls and ajax on my servers and/or laptop so that means 2008.1 of the infragistics controls... You ok with that?

D: You have to allow me asp.net controls as well (not 3rd party) but built in controls such as asp:label etc.

No problem on the rest, (and on your second challenge (not really a challenge) but will go ahead and add that as a tutorial to my website :)

btw you forgot preview pane, calendars, tasks and personal notes :) as I don't want to take advantage

NICE, Really looking forward to this so your challange is to replicate the outlook 2007 interface using ONLY infragistics controls. This as I mentioned before should include

1. Collapsable Splitter
2. Slidding Panes
3. New message alert
4. Navigation pane
5. Grid with similar filtering, grouping, Search Inbox combobox (typically top left of the email list view) and sorting features

The app obviously does not have to be a full blown application but it should demonstrate all the typical outlook features mentioned above as closley as possible and with ONLY IG CONTROLS. If you succeed then not only will I bow to your greatness in achieving what I considered not to be achievable but ill swallow my pride and admit that I may have been wrong with my assesment of IG.

 In case your up for another challenge, try to populate the grid with lets say 1 million records (up the anty eh). Enable all the grids features (grouping, paging and filtering) and get it all to work. If you can do this with the current grid (not aikido) then ill keep my big gob shut and hail the power that is Infragistics :)

 Very interesting

Ah challenges :) I love when people try and dare me to do stuff with IG controls  hahahah I will take that challenge :) I tell you what how about I change the current challenge on visualstudiotutorials.com to be web based Outlook 2007 Using ONLY Infragistics +SQL controls?

But WHEN I win the challenge you must both bow your heads to the power that is Infragistics... DEAL?

As far as the 500,000+ records ummmmm I have done this on more than one occasion (ICD9,CPT) codes so not sure where the problem is there except to say maybe your database is not indexed etc, but regardless will show you that as well..

"Look I don't want to be rude here but with Infragistics controls I can build/reverse engineer almost ANY website/application in under 30 days by myself..."

Try to acheive a web based version of OUTLOOK 2007 (Including Splitter, slidding panes, combo boxes, grid and alert) using ONLY IG controls. Go on I dare ya. I attempted this with IG but some of the controls mentioned above dont exist or by their very nature cant replicate it's desktop counterpart. This was easy to do with Telerik. I have always argued that a complete suite will allow you to blur the lines between a desktop app and its web counterpart. Some vendors have rolled out controls that can achieve this, but Infragistics current controls cant.

 Also try and load up 500,000 records (not even 1 million) with the IG grid and enable paging, grouping and filtering. Once it loads up (after a minute or so) try and go to page 2. Now watch it fall apart in front of your very eyes like magic.